The Reserve Bank of India (RBI) has proposed to exempt certain non-banking financial companies (NBFCs) from the requirement of registration. This announcement was made alongside the decision to keep the repo rate unchanged at 5.25%.

Specifically, the proposed exemption applies to NBFCs that meet the following criteria:

• Do not have public funds
• Do not have a customer interface
• Have an asset size not exceeding ₹1,000 crore

The RBI believes that exempting these smaller NBFCs from registration requirements will ease compliance and promote financial inclusion. Currently, Section 45-IA of the RBI Act, 1934, mandates that NBFCs obtain a certificate of registration from the RBI to commence or carry on business as a non-banking financial institution. They must also have a Net Owned Funds (NOF) of ₹10 crore, effective from October 1, 2022. Existing NBFCs have until March 31, 2027, to meet this NOF requirement.

In addition to the proposed exemption, the RBI is considering relaxing branch expansion norms for some NBFCs. Select NBFCs may no longer need prior approval to open more than 1,000 branches.

The RBI also announced measures to strengthen customer protection, including draft guidelines on mis-selling, loan recovery practices, and limiting customer liability in unauthorized electronic banking transactions. The central bank also proposed to introduce a framework to compensate customers up to ₹25,000 for losses incurred in small-value fraudulent transactions.

The RBI's Monetary Policy Committee (MPC) has been guided by external and domestic factors. While global headwinds have intensified, the successful completion of a trade deal with the U.S. bodes well for the Indian economy. The U.S. has agreed to cut tariffs on Indian imports in exchange for India halting Russian oil purchases and lowering trade barriers.

The RBI has revised its real GDP outlook for Q1 FY27 higher. The Indian economy is expected to grow 7.4% in the current financial year, with government advisors forecasting growth of 6.8-7.2% next year. The central bank has cut rates by a total of 125 basis points since February 2025, with a 25 basis point cut at its last meeting in December.